Experts are divided on raising interest rates ahead of the MPC meeting

Financial analysts have voiced concerns about a potential interest rate increase ahead of the two-day Monetary Policy Committee meeting of the Central Bank of Nigeria, which starts on Monday.

The CBN announced that it would host its 289th meeting in Abuja as part of its 2023 event programme.

Prof. Uche Uwaleke, a professor of capital markets and the chairman of the Chartered Institute of Bankers of Nigeria, Abuja Branch, summarised the expected conclusion of the MPC meeting by saying that the Committee will probably retain all the monetary policy parameters.

He said, “Plethora of historical evidence suggests that the MPC rarely adjusts policy rates in January due to the need to allow the markets to stabilise in the New Year.

“Also, inflationary pressure is beginning to reduce, as seen in headline inflation numbers for December 2022.

“I do not advise a further hike in MPR, as doing so beyond the current high rate of 16.5 per cent can jeopardise economic growth.”

However, analysts at Cordros Securities anticipate a rate increase following the meeting.

The panel of experts said in a paper that MPC may follow their worldwide counterpart’s lead and implement a little interest rate increase.

“Looking elsewhere, the prospect of global Central Banks embarking on smaller interest rate hikes could also influence the MPC’s decision to toe the same line amid concerns about the domestic economy”, they stated.